WASHINGTON-A key lawmaker Thursday called universal service “the 800-pound gorilla” and said that last week’s action by the Federal Communications Commission to raise the universal-service contribution factor above 10 percent amounted to “bait-and-switch.”
“We changed the Anti-Deficiency Act so they wouldn’t raise the contribution factor, but they raised it over 10 percent anyway,” said John Sununu (R-N.H.) at the Phoenix Center 2004 Annual U.S. Telecoms Symposium.
Just before the Senate left town earlier this month, it temporarily exempted the universal-service fund from the ADA.
The telecom industry became concerned earlier this year when the Universal Service Administrative Co. halted E-rate subsidies because of an accounting change.
USAC is a quasi-governmental organization created by the FCC to administer universal-service subsidies. As part of its efforts to tighten control on the much-derided E-rate program to connect schools and libraries to the Internet, the FCC recently ordered USAC to begin using Generally Accepted Accounting Principles, which meant it had to comply with the ADA. Because it couldn’t comply with the new accounting standards, USAC suspended E-rate payments in August.
Congress said USF subsidies were temporarily not subject to the ADA. A permanent fix is thought to be the focus of universal-service reform legislation to be considered next year.
The telecom industry was not as surprised as Sununu at the 10.7-percent contribution factor, with one observer noting the factor for much of this year had been artificially held down as the FCC worked through some one-time discounts and refunds.
Speaking generally, Sununu said, “universal service is a huge problem. I don’t think you can overstate the problems with universal service. We are spending a lot of money, but not spending it wisely. It has become viewed as entitlement by rural telcos, by the states and the regulators.”
Sununu was not alone in criticizing the universal-service program.
“Universal service is a nightmare. It is inefficient; it is expensive,” said Larry Irving, former assistant Commerce secretary for communications and information and now with the Internet Innovation Alliance. “Universal service means something different in 2005 than it did in 1934.”
